Despite Austin City Council’s decision to again postpone addressing a rezoning request that could result in the transformation of the former Austin-American Statesman headquarters into a district of mixed-use towers, there are signs developer Endeavor Real Estate Group LLC is making progress.
City Council on Sept. 29 did not vote on the request for a planned unit development, or PUD, for the property at 305 S. Congress Ave. It was the fourth postponement of the PUD vote, which would allow Endeavor to build taller and denser on the 19-acre tract just south of Lady Bird Lake than typically allowed.
“I think we can actually get through this,” Mayor Steve Adler said.
At stake is a plan to build 1.5 million square feet of office space, more than 1.6 million square feet of residential space, 220,000 square feet of hotel space and 150,000 square feet of retail space across six towers. 305 South Congress would also integrate into Austin’s South Central Waterfront Initiative, the city’s long-term vision to bring dense, mixed-use development to the south side of Lady Bird Lake.
Council voted 10-0-1, with Council Member Vanessa Fuentes absent, to punt the vote to its Oct. 13 meeting.
“We were very pleased that the City Council deliberated on so many of the issues surrounding the project,” said attorney Richard Suttle of Armbrust & Brown PLLC, representing Endeavor. “The mayor did a masterful job of organizing and leading the productive discussion. While an actual vote was postponed, many questions were answered and direction was given to us and the city staff. Council members were able to express their interests and the feedback was constructive. And many issues were resolved. It appears progress is being made.”
As living costs soar in Austin, affordable housing is a key sticking point in what’s called the Statesman PUD. Some housing advocates and members of Council have pushed Endeavor to dedicate more housing in the project as affordable.
Suttle said Endeavor is prepared to dedicate 4% of the residential units, or 55, for those earning 80% of the median family income level. If offering the units at 60% MFI, Endeavor would be able to provide about 36 units.
Some in the city want to see Endeavor provide 20% affordable housing, in line with goals set out in the South Central Waterfront Initiative. However, Jerry Rusthoven, the city’s chief zoning officer, confirmed that the particular tract in question was previously approved at 4% affordable housing.
“I don’t think there is even agreement about that even for our city staff,” Council Member Kathie Tovo said during the meeting. “”It seems to keep coming up and I think we need to have an executive session about it.”
Tovo continued to spearhead the sentiment that as a planned unit development, it should follow the 10% affordable housing standard set in city guidelines for such projects.
Suttle said the 4% dedication to below-market rates will cost the developer about $23.2 million but an increase to 10% would cost about $50 million, making the project unprofitable for Endeavor.
Endeavor is also willing to offer the $23.2 million to the city as a fee-in-lieu or to transition part of a nearby multifamily property, the 207-apartment 422 at The Lake, into income-restricted units that could become available in a matter of months and exceed more than 55 units at 80% MFI.
An exact number of how many units would be dedicated to affordable housing at the property was not discussed during the meeting.
The median family income level for a family of three in Travis County is $99,250. For the same size family, 80% MFI is $79,450, according to the city’s Housing and Planning Department.
Darin Smith, managing principal with Economic and Planning Systems Inc., a third party hired by the municipality to review the project, told Council that Endeavor could not bear the cost of the additional requests.
He said that a 2020 study found the development has a funding gap of about $146 million, meaning the planned improvements will exceed the project’s value by that amount. Using updated economic standards from 2022, that gap has increased to $318 million.
In short, as of 2022, the estimated $2.47 billion cost of the project outweighs the project’s $2.16 billion value.
“While rents and property values have gone up significantly in the past years, construction costs have increased even more,” Smith said. “The overall economy of the project has not improved, and perhaps has even grown.”
In total, the previously agreed upon benefits would cost Endeavor $117.5 million. That includes $30 million for offering 4% of the project’s rentals at 80% MFI and payment in lieu for 4% of the project’s condominiums, $1.8 million for offering retail space at 60% market value, $70 million for nearly 4,000 underground parking spots, $12 million for dedicating 1.92 acres of developer base land for a trail extension and $1.7 million for parkland easement and maintenance costs.
“There is some real divergence with regard to affordable housing and the amount of parking,” Tovo said. “These are just the issues that we are going to have to sort through.”
Facing questions from Council regarding the major investment in parking, Suttle said the thousands of spots were planned to ensure the project could receive financing, bolster commercial leasing and provide a visual benefit to the area, with open space between the proposed towers rather than multiple above-ground garages.
Suttle said Endeavor would not build above-grade parking at the location.
Endeavor is working as master developer of the tract, which has been owned by the affluent Cox family since 2015. Six towers are planned, ranging from 215 feet to 535 feet in height.
As designed by Chicago-based Skidmore Owings & Merrill, each of the planned towers would include two to three levels of outward-facing retail and restaurant space encircled by outdoor patios.
The project would also redirect and expand Barton Springs Road, which would run through the southern end of the property. A rail station is also possible as part of the city’s public transit expansion plan, Project Connect.
Endeavor also promises about eight acres of new public open space, a third of a mile of restored hiking and biking trails and an acre of restored shoreline.
Sander Mohn, a development associate with Endeavor, previously told Austin Business Journal that the project aims to embrace its location along the Colorado River and improve public accessibility to observe Austin’s famed urban bat colony under the Ann W. Richards Congress Avenue Bridge.
In closing the discussion, Adler said he feels Council is closer to moving forward with Endeavor’s request.
“We are trying to future out what it is we need to do as a city to be able to ensure that we have parkland there and affordable housing,” Adler said. “That is what this is an exercise of. It is clear we are unable to demand what it is that we want and the economics are such that they can’t give us everything that we want absent us participating in that somehow.”
Mayor Pro Tem Alison Alter stressed that Council may not vote on the project during its next planned discussion on Oct. 13 amid lingering questions like how the city’s parks department and Endeavor will manage and maintain the prosed green space.
“I think we made progress today and I am glad to see that but if we don’t have answers to the questions, I don’t think we should expect to vote, even on a second reading,” Alter said. “This is a very complicated PUD and I want us at third reading to have a real ordnance that we will be able to vote on clearly.”
Council in April approved the first of three readings needed for the PUD.
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